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As much as it hurts, it's always good to own up to your mistakes. After all, it's the best way to become a better investor.

I was sure that OmniVision Technologies (NAS: OVTI) would be the sole supplier of the image sensor found in Apple's (NAS: AAPL) latest and greatest iPhone 4S, only to be promptly proved wrong when Sony (NYS: SNE) parts were found inside. Although my thesis for owning OmniVision shares extends beyond its relationship with Cupertino, the company has been testing my limits as a shareholder lately.

The specialist in back-side illuminated (BSI) sensors was clobbered after last quarter's results, when the company gave relatively soft guidance for what's typically a seasonally strong quarter. Back then, OmniVision forecasted second-quarter revenues in the ballpark of $255 million to $275 million, with GAAP earnings per share of between $0.42 and $0.54. Excluding items, non-GAAP earnings per share were expected in the range of $0.52 and $0.64.

The figures led to a precipitous 30% drop the following day, enough to persuade Fool Anders Bylund to go long for himself. Well, Anders and I are sure eating our words, as the stock tanked by as much as 19% today after OmniVision revised its guidance even lower, which has inevitably rekindled fears of not being invited to the iPhone main event, even though the secondary-camera spot was confirmed.

OmniVision now sees second-quarter sales between $212 million and $217 million, which was attributed to an "unexpected cutback in orders" and dampened unit sales for OmniBSI and OmniPixel3-HS offerings. The midpoint of that guidance represents a 19% decline from the prior guidance's midpoint -- an ominous coincidence considering the 19% drop in the stock today.

The OmniBSI-2 based 8-megapixel OV8830, which I had predicted as the iPhone 4S's shooter, will begin shipping in "very limited quantities" toward the end of the second quarter, further humbling this Fool. The only bright spot in today's announcement is that the company's board has authorized a $100 million stock-buyback program.

One of the critical aspects of my thesis was that OmniVision was several generations ahead of rivals like Sony, STMicroelectronics (NYS: STM) , and ex-Micron (NYS: MU) division Aptina. The guidance revision today is concerning me that competitors are catching up in BSI technology and stealing design wins at major OEM customers like HTC and Motorola Mobility (NYS: MMI) . If BSI chips become commoditized and OmniVision loses its ability to differentiate, shareholders like me can kiss pricing power goodbye and say hello to contracting margins.

Hopefully the next generation of BSI-2 sensors will set OmniVision apart, but I'd be lying if I said I thought it was going to be clear sailing from here.